Uniform Bar Examination (UBE) Contracts and Sales Flashcards

24 sample cards from the Contracts and Sales deck

Sampled from the end of the deck, so these are different cards from the ones shown on the syllabus page.

1. Distinguish a void title from a voidable title under the UCC entrustment/good-faith purchaser rules.

   A thief has void title and can pass none, so the true owner prevails. A seller with voidable title (e.g., obtained by fraud or bad check) CAN pass good title to a good-faith purchaser for value. Entrusting goods to a merchant who deals in such goods lets that merchant pass title to a buyer in the ordinary course of business.

2. What is anticipatory repudiation and what are the non-repudiating party's options?

   A clear, unequivocal statement or act before performance is due that a party will not perform. The other party may: (1) sue immediately, (2) suspend performance and await performance, (3) treat the contract as discharged, or (4) urge retraction. Repudiation may be retracted unless the other party has relied or canceled.

3. Under the UCC, when may a party demand adequate assurances of performance?

   When reasonable grounds for insecurity arise, a party may demand adequate assurance in writing and suspend its own performance until received. Failure to provide assurance within a reasonable time (max 30 days) is treated as a repudiation.

4. Distinguish impossibility, impracticability, and frustration of purpose as excuses for nonperformance.

   Impossibility: performance is objectively impossible (death of essential person, destruction of subject matter, supervening illegality). Impracticability: an unforeseen event makes performance extremely and unreasonably difficult/costly. Frustration of purpose: an unforeseen event destroys the basic purpose of the contract though performance remains possible.

5. Distinguish rescission, accord and satisfaction, and novation as ways to discharge a contract.

   Rescission: mutual agreement to cancel (each gives up remaining rights). Accord and satisfaction: agreement to accept a different performance (accord) plus its actual performance (satisfaction) discharges the original duty. Novation: substitution of a new party with all parties' consent, releasing the original obligor.

6. State the goal and standard of expectation damages.

   To put the non-breaching party in the position it would have occupied had the contract been performed (the 'benefit of the bargain'). Damages must be foreseeable, certain, unavoidable (mitigated), and causally connected to the breach.

7. State the buyer's UCC damages formulas for a seller's failure to deliver or repudiation.

   If the buyer covers (buys substitute goods in good faith): cover price − contract price + incidental/consequential damages − expenses saved. If the buyer does not cover: market price (at time buyer learned of breach) − contract price + incidentals/consequentials − expenses saved.

8. State the seller's UCC damages formulas for a buyer's breach/repudiation.

   Resale: contract price − resale price + incidentals. No resale: contract price − market price + incidentals. Lost-volume seller: lost profit + incidentals. Action for the price: when goods can't be resold or risk has passed, seller may recover the full contract price.

9. What are incidental versus consequential damages?

   Incidental damages are costs of dealing with the breach (inspection, transport, storage, reselling/recovering goods). Consequential damages are foreseeable special losses (e.g., lost profits) arising from the breaching party's knowledge of the non-breaching party's particular needs at contract formation (Hadley v. Baxendale).

10. What is the duty to mitigate, and what is its effect on recovery?

    The non-breaching party must take reasonable steps to avoid/reduce damages. Damages that could have reasonably been avoided are not recoverable, but the burden is on the breaching party to show the failure to mitigate.

11. When is a liquidated damages clause enforceable?

    When (1) actual damages were difficult to estimate at the time of contracting, and (2) the amount is a reasonable forecast of probable damages. If it operates as a penalty (grossly disproportionate), it is void and the party recovers only actual damages.

12. Distinguish reliance damages from restitution damages.

    Reliance damages compensate for expenses incurred in reliance on the contract (restoring the plaintiff to the pre-contract position). Restitution prevents unjust enrichment by recovering the value of a benefit conferred on the other party (measured by benefit received, available even absent an enforceable contract via quasi-contract).

13. When is specific performance available, and when is it unavailable?

    Available when the legal remedy (money) is inadequate — typically for land (always considered unique) and unique goods (e.g., heirlooms, art). Unavailable for personal-service contracts (courts will not compel service, though they may enjoin competing work) and where terms are too uncertain or enforcement would be too difficult to supervise.

14. What UCC remedies allow a buyer to obtain the goods themselves rather than money?

    (1) Specific performance for unique goods or other proper circumstances, and (2) replevin if the buyer cannot reasonably cover. (3) A buyer who has paid may recover identified goods if the seller becomes insolvent within 10 days of receiving the first payment.

15. What are an aggrieved seller's remedies regarding the goods upon the buyer's breach or insolvency?

    The seller may (1) withhold delivery, (2) stop goods in transit, (3) reclaim goods from an insolvent buyer (demand within 10 days of receipt; no time limit if buyer misrepresented solvency in writing within 3 months), (4) resell and recover damages, or (5) sue for the price.

16. What are the buyer's rights after rightfully revoking acceptance of nonconforming goods under the UCC?

    Revocation is allowed if the nonconformity substantially impairs value and was hard to discover or the buyer relied on cure. After revocation, the buyer is restored to pre-acceptance position: may cancel, recover payments, cover, and obtain damages, and holds the rejected goods with a security interest for payments made and expenses.

17. Distinguish reformation from rescission as equitable remedies.

    Reformation rewrites a written contract to reflect the parties' true agreement (used for mutual mistake or fraud in drafting). Rescission cancels the contract and returns the parties to their pre-contract positions (used for mistake, misrepresentation, duress, etc.).

18. What is an intended third-party beneficiary, and what are the two types?

    A non-party the contracting parties intend to benefit and who can enforce the contract. Creditor beneficiary: the promisee owes the beneficiary a debt being satisfied. Donee beneficiary: the promisee intends to make a gift. (Incidental beneficiaries have NO enforcement rights.)

19. When do a third-party beneficiary's rights vest, cutting off the original parties' power to modify or rescind?

    When the beneficiary (1) manifests assent to the promise, (2) detrimentally relies on it, or (3) brings suit to enforce it. Before vesting, the original parties may freely modify or rescind.

20. Whom may a third-party beneficiary sue, and what defenses apply?

    The beneficiary may sue the promisor (the one who promised the performance). A creditor beneficiary may also sue the promisee on the underlying debt. The promisor may assert against the beneficiary any defenses it would have had against the promisee.

21. Distinguish an assignment of rights from a delegation of duties.

    Assignment transfers a contract right (e.g., the right to payment) to a third party (assignee), who can then enforce it. Delegation transfers the performance of a duty to a third party (delegate). Contracts typically involve both ('assignment of the contract').

22. Which rights are NOT assignable?

    Assignments that would (1) materially change the obligor's duty or risk, (2) be barred by contract (anti-assignment clauses — often construed to give only a right to damages, not to void the assignment), or (3) be prohibited by law/public policy. Future rights from future contracts are generally not assignable.

23. What is the effect of a valid assignment on the obligor, and what happens with successive assignments?

    The assignee gains the right to performance and may sue the obligor directly; the obligor must perform for the assignee once notified. Among successive assignees, the general rule is the first assignee for value prevails, though a later assignee who takes for value without notice and is first to obtain payment/judgment/novation may prevail.

24. Which duties may NOT be delegated, and does the delegating party remain liable?

    Non-delegable duties: those involving special skill/personal judgment, where the obligee has a substantial interest in personal performance, or where the contract prohibits delegation. The delegating party (delegator) remains liable; only a novation (with the obligee's consent to substitute) releases the delegator.

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